The Globe and Mail | Photo: Google’s headquarters in Mountain View, Calif. | MARCIO JOSE SANCHEZ/THE ASSOCIATED PRESS

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“There’s been a bit of a shift,” Mr. Roy said. “Some of those same binary option scams have rebranded, dropped selling binary options and are essentially carrying on scamming people, but using different products like cryptocurrencies.”

Mr. Roy said regulators are trying to work alongside tech companies such as Facebook Inc. and Google to try to disrupt the fraud schemes.

He applauded a recent move by Facebook, which announced on Jan. 30 that it’s banning all ads promoting financial products that are often associated with “misleading or deceptive promotional practices,” including binary options, cryptocurrencies and initial coin offerings. ICOs are an emerging fundraising method in which companies sell digital “tokens” or “coins” to finance new ventures.

The tech company said in a statement that there are many companies advertising such products who are not operating in good faith.

“This policy is intentionally broad while we work to better detect deceptive and misleading advertising practices,” the company statement said.

“This policy is part of an ongoing effort to improve the integrity and security of our ads, and to make it harder for scammers to profit from a presence on Facebook.”

Mr. Roy said he hopes that Google will follow Facebook’s example with a similar ban. “We’ve developed a relationship with these companies and are reaching out to try to work together to effect policy changes that are mutually beneficial and disrupt these schemes,” he said.

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In an e-mailed statement, a Google spokeswoman said: “Google already has robust policies in place against misleading and misrepresentative ads, including cryptocurrency ads, and we actively enforce those policies.”

Not all cryptocurrencies and ICOs are necessarily scams, Mr. Roy noted. But, he added, “It’s really hard to decipher what’s legitimate and what’s not.”

With binary options, investors “bet” on the performance of an underlying asset such as a currency, commodity or stock. The time-frame for the bet is typically very short – sometimes just hours or minutes. They’re often called “all-or-nothing” options because when the time is up, the investor is generally supposed to walk away with either a preset payout or nothing at all.

However, the CSA said that in many cases, no actual trading occurs and the investor’s money is simply stolen. Those who provided their personal information to binary options sites often fall victim to identity theft as well, according to regulators.

Regulators around the world have taken action against allegedly fraudulent cryptocurrencies. Last December, the U.S. Securities and Exchange Commission won an emergency asset freeze to stop a fast-moving initial coin offering called Plexcoin, which was advertised on Facebook and promised investors a 13-fold profit in less than a month.

The SEC filed charges against Dominic Lacroix, a recidivist Quebec securities law violator, and his company PlexCorps, over the scheme. His romantic partner, Sabrina Paradis-Royer, was also charged.

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Sources tell Reuters that South Korea’s intelligence agency told lawmakers North Korean hackers could have been behind the $530-million theft of virtual coins from a Japanese cryptocurrency exchange last month. Reuters

Source: Securities regulators seek Google ad ban on cryptocurrencies, initial coin offerings – The Globe and Mail

 

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